Liberman Broadcasting Inc. is a family-owned business that values its privacy. That creates a quandary, because on July 26 the company filed a prospectus with the Securities and Exchange Commission to go public.

President Jose Liberman, age 81, and his son Lenard, executive vice-president, run the Burbank-based company that owns six radio stations and one TV station in the Los Angeles market. All told, Liberman has 16 radio stations and four TV stations in L.A. Houston, Dallas and San Diego.

KRCA-TV (Channel 62) ranks as Liberman's highest profile property in L.A., supported by a slew of AM and FM radio outlets airing mariachi and regional Mexican music. Unlike competitors Univision Communications Inc. or Entravision Communications Corp., Liberman's strategy focuses on home-grown programming that appeals to the local market.

"Our ability to produce targeted programming to Hispanics living in the markets we serve gives us an advantage over most other Spanish-language broadcasters that develop and distribute their programming on a national basis," the prospectus states. "We are particularly adept at programming to the tastes and preferences of the Hispanics of Mexican heritage."

In Los Angeles, Hispanics comprise 43 percent of the population, and Mexicans represent 80 percent of that segment, according to Census data, making it the perfect environment for Liberman's strategy.

In-house production means Liberman can integrate advertising messages and promotions into its programs. For example, "El Show de Don Cheto," a typical music-variety series, can integrate a product into the action or have a host hype it. "We differentiate ourselves from other Spanish-language broadcasters by offering advertisers the greatest value for their advertising dollar," according to the company.

Each week the TV stations produce 50 hours of original programming. Infomercials account for much of the rest of the air time, together with foreign movies, mostly from Mexico.

The strategy also includes heavy cross-promotion. For example, Don Cheto also has a radio show. Likewise, the similar demographic profile of its TV and radio audiences Spanish-dominant Mexican immigrants allows the same advertisers to reach the same audience through two media. "By supporting advertisers' media campaigns with creative promotions and offering our studio facilities to provide value-added services, we are able to cross-sell our broadcasting properties and attract new customers currently not advertising on radio or television," the prospectus states.

Local advertising accounts for about 82 percent of the company's revenue, with national ads providing the rest. A report from investment firm BIA Financial Network predicts local radio spending will grow only 0.8 percent this year, but rise to about 2 percent each year until 2010. On the TV side, the Television Bureau of Advertising forecasts that total TV ad spending will decrease in 2007, but local spot revenues will remain flat or grow up to 2 percent.

Liberman has found a viable niche in the local spot market. Annual revenues for 2005 totaled to $97.5 million, with nearly equal shares coming from radio and TV.

However, the company has incurred net losses in three of our last five fiscal years and carries a debt load of $358 million. "As a result of our substantial debt and the covenants included in our debt agreements, our ability to expand our business through capital expenditures, acquisitions and other means may be diminished," the prospectus states. "We plan to use approximately $75.6 million of the net proceeds from this offering to repay a portion of our outstanding debt."

Public issues

For now, Jose and Lenard Liberman own 100 percent of the company's stock. In conjunction with the IPO, the company would create a second class of stock (B shares) with 10 times the voting power of regular shares. The Libermans would retain all the B shares, ensuring continued family control of the company.

Wall Street usually doesn't like such cozy family arrangements, "but with Spanish-language media, people expect it or ignore it," said Marla Backer, an analyst with Research Associates in New York.She notes the same behavior from other Spanish-language moguls. Raul Alarcon Jr. and his father Raul Sr., for example, control Spanish Broadcasting Systems Inc., a public radio company in Miami. In Los Angeles, Jerry Perenchio, chief executive of Univision Communications Inc., owns B shares with 10 times the voting power of regular shares.

Perenchio also epitomizes the publicity adverse executive he once fired a chief executive for giving a newspaper interview. Despite repeated attempts, the Libermans declined to be interviewed for this article.

But other than a secretive streak, the Libermans share more with the Cuban immigrant Alarcons than with Perenchio, a Hollywood financier who saw a good play in Spanish-language TV.

Jose Liberman started his media ownership career in 1957 with the purchase of XERZ in Mexico. In 1976, he acquired KLVE-FM (107.5), the first Los Angeles FM station to air in Spanish. In 1979, he purchased KTNQ-AM and combined it with KLVE to create the first Spanish-language AM-FM combination in the market. He sold the combo to Heftel Broadcasting (now Univision Radio) in 1986. The following year he founded Liberman Broadcasting with this son, who has both an M.B.A. and law degree from Stanford.

Aside from questions about transparency, an investment in Liberman stock would carry some significant financial risks. The prospectus states that the IPO price is expected to be substantially higher than the net tangible book value per share. Moreover, the company doesn't expect to pay dividends for the foreseeable future.

"If you purchase shares in this offering, the price of our Class A common stock may be required to appreciate in order to realize a gain on your investment," the prospectus warns.

As for the plan to go public, it could receive a low-profile acceptance on Wall Street these days. According to a study from Renaissance Capital, only three media companies have gone public this year.

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